NIQ: S.African consumer outlook reveals 'financial polarisation'

NielsenIQ, a leading global consumer intelligence company, recently released its Mid-Year Consumer Outlook Guide to 2025 report, shedding light on key macro trends affecting various industries. The data from the report highlights financial polarisation among South African consumers, with 42 percent feeling financially better off compared to the previous year and 33 percent indicating a decline in their financial situation. These numbers have shown improvement year-on-year, indicating a shift in consumer sentiment in the country. To delve deeper into the findings of the report, Zak Haeri, Managing Director for NielsenIQ in South Africa, joined CNBC Africa for a discussion on the implications of the data. Haeri pointed out that there are several positive indicators that support the improved consumer outlook in South Africa. The JSC top 40 is up by 18 percent year-on-year, interest rates have decreased, and there has been a rise in applications for the two-part pension system. Consumer confidence is currently at a five-year high in the country, fueling a sense of optimism among consumers. Despite the historical price sensitivity of South African consumers due to inflationary pressures on groceries and other essential items, there has been a deceleration in the rate of price increases. Haeri noted that although the Consumer Price Index (CPI) stands at around 4.4 percent, the slowdown in inflation has contributed to a more positive consumer sentiment. Haeri expressed confidence in the sustainability of this optimism, citing favorable economic fundamentals and a general mood of cautious optimism among businesses and consumers in the country. He highlighted a decrease in the Producer Price Index (PPI) to 2-3 percent, lower than the current CPI, and anticipated that this trend would eventually translate into lower consumer prices. As food prices remain a primary concern for consumers, the expected deceleration in food inflation is likely to further enhance the financial well-being of South African consumers. The report also touched on the concept of 'hustle culture,' revealing that 83 percent of respondents are actively seeking additional income streams. This trend is not unique to South Africa, as global data shows that 64 percent of respondents worldwide are exploring similar opportunities. Haeri attributed this phenomenon to declining real wages and the availability of new technologies and platforms that facilitate alternative income sources. The report, with its forward-looking approach towards 2025, serves as a roadmap for South African retailers seeking to attract consumers in the upcoming year. Haeri emphasized the challenges faced by retailers in a high-inflation environment and commended the industry for proactively exploring new revenue streams beyond traditional margins. He highlighted successful case studies of South African retailers leveraging innovative strategies to drive profitability, including personalized marketing, targeted offers, and media businesses. Haeri concluded that the insights from the report provide retailers with valuable consumer context, enabling them to optimize their operations and enhance their competitive positioning in the market.